Trading thrill shifts from dealing rooms to homes

MUMBAI: A peep into a stock broker���s dealing room today may not give you the sense of the excitement that was prevalent earlier amid the loud buzzing of telephones, and the hurried tapping of keyboards by dealers, as they scrambled to execute clients��� orders at the best price.

A good slice of that excitement has now shifted away from dealing rooms to many households across the country. An increasing number of investors, mostly youngsters and homemakers, have turned net-savvy and are using the internet to trade in shares.

Daily average online turnover accounted for 23% of the total cash turnover on the National Stock Exchange (NSE) in September this year. This is higher than 21% in September 2008 and 19% a year before. Interestingly, the higher percentage has been recorded on an incremental rise in total turnover. Daily average cash turnover amounted to Rs 18,322 crore, Rs 12,489 crore and Rs 13,302 crore in these months, respectively. However, in the F&O segment, the share of online turnover declined as, according to brokers, last year���s market turmoil prompted retail investors to take a cautious view on relatively more speculative derivatives market. Percentage of internet turnover in the NSE���s F&O segment fell to 15.7% from 16.2% and 19.6%, respectively.

According to brokers, online trading has become the most convenient way of trading, because of its advantages like speed and transparency.

It saves on-time spent on calling a dealer, placing an order and getting it executed. Time is a crucial factor, especially when the market is quite volatile,��� said Indiabulls Securities CEO Divyesh Shah. With six lakh online clients, the broking house claims to have about 4% market share in the industry. Its client base comprises youngsters, home makers and working women. Most of the clients are in the age group of 18-25 and 25-40, added Mr Shah.

Nandip Vaidya, president (retail broking), India Infoline, feels use of internet for stock trading is growing across socio-economic strata. ���The younger generation is showing a lot of interest in online trading. Average age is declining with the addition of more and more accounts,��� he said.

India Infoline enjoys a market share of 3.6% (both cash and F&O) and it offers services to 7.3 lakh clients. According to Kedar Deshpande, head of Edelweiss Capital���s client advisory services, India has around 7-8 million active equity investors who are well-educated, well-read, technology-equipped and technology-savvy and so adapting a platform, which gives them easier access to the equity market, is not a problem for this segment.

���Online trading offers retail clients access to markets at their will, and they can transact by snatching a couple of minutes of their busy time in office. They feel in control, get privacy, and can track their portfolios,��� said Mr Deshpande. Edelweiss is among recent entrants in the online trading space.

Recent incidences of misusing investor accounts to carry out fraudulent transactions have raised concerns over security of online trading. However, leading brokers have put in place many checks and balances to ensure safety of transactions and payments. ���We have taken measures to protect password. We also offer additional security features like code number punching to log in. There has been constant monitoring of investor account by our compliance department,��� said Mr Divyesh Shah.

According to Boston-based global financial research and consulting firm, India���s online retail broking industry is growing rapidly, offering a number of opportunities for both retail broking firms and technology vendors. The firm expects e-trading turnover to rise to 30% in the next 2-3 years.